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Inspired Series – Interview with Andrew Screen, Senior Director of Residential Investment and Funding at CBRE

CBRE Residential are experts in prime London homes. They are part of CBRE’s globally leading business in real estate services and investment, offering a range of stunning properties to buy or let, as well as investment, management and consultancy services. We caught up with Andrew Screen, Senior Director of Residential Investment and Funding and to out more about London’s residential market and what his role entails.

Please tell us what your role entails at CBRE?

I am a Senior Director at CBRE in the Residential Investment and Funding department, arranging funding from investors and investment funds for residential development and specialise in the Private Rented Sector/Build to Rent.

How did you first get into property / what sparked your interest?

I completed a Quantity Surveying degree and then went into Banking, followed by Property Development, Structured Finance and then Financial Consultancy. Effectively, I have always been in property finance, just focusing on different aspects.

What has been your career highlight?

Recently funding the Brighton i360 (http://britishairwaysi360.com/) project which involved innovative loan funding from the local authority to the developer who are Marks Barfield Architects, the developers and architects behind the London Eye.

The UK is currently experiencing a housing crisis, with a lack of good quality supply and ever-increasing demand. In your opinion, what is the solution to this?

We need to build more homes and progress strategic development initiatives such as accelerating garden city type schemes with innovative funding and utilising local authority, NHS and MOD/MOJ surplus sites, as piecemeal development is unlikely to provide a significant impact to the supply. We will also need to address the skills shortage being faced by property developers and contractors.

Another question on many investors lips is whether buy-to-let is dead. Do you agree with this, or is there still a future for the sector?

Buy-to-let has grown massively over the last few years – up 132% since 2010, in contrast FTB have only increased by 53% and no signs of it slowing. The Private Rented Sector (PRS)/Build-to-Rent is well funded and experiencing significant growth due to the vast amount of funding and expected to increase again this year.

I assume you are wondering whether the recent government fiscal announcements ( stamp duty and reduction of tax relief) will cause a slowdown – we think that most seasoned investors will view the addition 3% levy as modest in view of recent and expected price growth – however according to RLA around a third of Buy-to-Let investors will not increase the size of their portfolios- this could mean 18,700 fewer purchase in London after April.

I also expect BTL investors will look at setting up funds/investing in funds and transferring their assets into funds therefore holding an indirect rather than a direct investment in BTL, therefore I would expect some consolidation of portfolios.

Places such as Croydon, Peckham and Greenwich have been huge hits with purchasers and developers recently. Where’s next?

We still think Greenwich has a long way to go – Greenwich peninsula 15,000 units – it will be a new location.

Canary Wharf is now becoming a residential destination with 10 park drive the first time you can buy within the CW estate. I would also watch Wandsworth, Haringey, Redbridge, Enfield, Waltham Forest, Ealing, Lewisham and Southwark. Outside London I would watch Manchester, Edinburgh, Birmingham, Leeds, Reading, Basingstoke, Bristol, Southampton, Brighton and Cambridge.

You specialise in property development and investment funding at CBRE. How do you see the market changing in 2016?

I expect to see more PRS projects starting in 2016 and equity being committed by the investment funds, I also anticipate more debt funding entering this sector from the clearing banks and new debt funders. There will be more public sector land coming to the market for development partners in 2016 and local authorities will be finalising their PRS vehicles. Registered Providers have started to move into private sector residential development and are setting PRS vehicles, many of which will be formed by the end of the year. I would expect to see more property developers entering the market as the demand for development expertise increases, albeit these will be small to mid-sized developers and start-ups. I would also expect to see significant government intervention into mechanisms to increase housing supply by the release of public sector land and funding mechanisms. Construction cost increases will continue to impact the development market due to the shortage of skilled construction workers.

Finally, many believe that we are heading for a crash in 3-4 years’ time. What’s your opinion on this, and how can people prepare?

I do not foresee a major property crash however the market will cool down and I will be watching the Chinese economy, oil price and interest rates as key indicators. People should be cautious about taking on mortgages which they cannot afford and should look their ability to repay mortgages in the event of interest rates increase which are anticipated.